Analytic tools to move from a Red Ocean Strategy to a Blue Ocean Strategy (part 1)

In one of my last posts, I talked about blue oceans strategy and how it differs from a red oceans strategy, according to what was written by W. Chan Kim y Renee Mauborgne in their book “Blue Ocean Strategy”. In that post I summarized what was stated by the authors presenting the principles they exposed, but in order to complement what I wrote in this and the next two posts I will write about three tools that will help entrepreneurs and businessmen move from a red ocean with many companies struggling to capture the same market to a blue ocean where new values can create a whole new market.

The first tool is called Strategy Canvas. This tool provides a framework to diagnose a blue Ocean Strategy. The reason is because on one hand it is possible to observe where is my business compared to the competition and on the other hand we can see which items are the other companies investing in order to stand out including the factors in which competence is based and the value that the customers are receiving through the supply of goods and services.

In order to develop a Strategy Canvas the first thing you must do is determine the factors in which the industry is investing. Once you have determined these factors you may continue by scoring your company good or service and the competition according to a certain range. With this information it is possible to construct the value curve, which is the primary component of the Strategy Canvas. In the horizontal axis you must arrange the different factors and in the vertical axis the scoring range of these factors. The following is an example of the Strategic Canvas

Strategic Canvas Example

Strategic Canvas Blue Ocean

According to the example it is possible to observe in which factors is my company doing better than the competition and in which ones we are worse. Generally speaking company 2 has a better performance than our business in most factors while company 1 has a worse performance (excluding items 3 and 7).

Before I finish this post it is important to understand how the Strategic Canvas contributes to a Blue Ocean Strategy. Even though we can see in the example that our product has a worse performance comparing to company 1, we should not struggle against this competitor improving our performance in this factors because this would be a Red Oceans Strategy. Therefore we should offer new alternatives (factors) to our opponents and turn our costumers the industry “non costumers”. In the post that will follow this one I will present a second tool in order to achieve this reorientation.

Image taken from Flickr.com

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